Income Tax Dept Withdraws Long-Pending ₹8,500 Cr Transfer Pricing Dispute With Vodafone India
The Supreme Court allowed the Income Tax Department to withdraw its long-pending Rs. 8,500 crore transfer pricing dispute against Vodafone India.
Vodafone - India - taxscan
Vodafone - India - taxscan
In a recent development, the Supreme Court allowed the Income Tax Department to withdraw its long-pending Rs. 8,500 crore transfer pricing dispute against Vodafone India Services Pvt. Ltd., ending a case that had remained unresolved for nearly a decade.
The case arose from a transfer pricing adjustment made by the tax authorities in relation to Vodafone India’s sale of its Ahmedabad-based call centre business to Hutchison Whampoa Properties (India) Ltd.
The department claimed that the deal involved the transfer of intangible assets and that the transaction qualified as an international one under Indian tax law, making it liable to additional tax.
The company’s counsel argued that the sale was purely a domestic transaction between two Indian entities and that no cross-border transfer of assets had occurred. The company submitted that the department had wrongly treated the transaction as an international one, leading to an unjustified addition of Rs. 8,500 crore to Vodafone’s taxable income.
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The Bombay High Court had earlier ruled in favour of Vodafone, holding that the transaction did not fall under the scope of international transfer pricing regulations. The department later approached the Supreme Court, but the case remained pending since 2016 without any progress.
The matter came up before a Bench led by Chief Justice B.R. Gavai, which permitted the Income Tax Department to withdraw its appeal. The court observed that the case had been inactive for several years and that the department’s decision to drop the proceedings effectively brought the long-standing dispute to an end.
The withdrawal came shortly after the Supreme Court directed the Union government to extend relief to Vodafone Idea Ltd. regarding its adjusted gross revenue (AGR) dues. The court explained that the government could reassess and reconsider Vodafone Idea’s total AGR dues, including interest and penalties, up to the financial year 2017.
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